Kenya: Safaricom Faces M-Pesa Break Up in Market Dominance War

Telecoms operator Safaricom could be forced to hive off its popular mobile money service M-Pesa if sector regulator, the CA, moves to implement recommendations of a market dominance report.

Separating the highly profitable mobile money service from Safaricom’s core telecoms business – commonly referred to as functional separation – is the gist of a raft of recommendations that international consultants – Analysys Mason – have made in a yet-to be published report seen by the Business Daily.

“The two businesses would be required to operate in separate offices, with separate staff below board level, separate branding, separate accounting and separate business operations and support system, customer support systems and management information systems,” the report says, adding that it would however stop short of separating M-Pesa and Safaricom into different legal entities.

The Communications Authority of Kenya (CA) hired the consultants as part of it effort to find an appropriate legal framework for regulating abuse of market dominance and anti-competitive behaviour that began in 2010.